Antibe Therapeutics Inc(Pre-Merger) ATBPF

RE:Let's think about those options and the tax implications

[HossBender]

All depends on whether the options were granted to him (in the money), in the money basically means that the option exercise price was greater than the share price at the time they were granted to him... ( I didn't check to see if this is the case) If the options were not in the money he would have a taxable benefit based on the difference between the option price and the exercise price, BUT! he would be able to reduce the amount of taxable benefit to half of the benefit on the shares at the exercise date under Section 110(1)(d) of the ITA. So in your scenario above assuming the options were not in the money he would have a taxable benefit of 687,492 x (0.48 - 0.145) ~= 230,310 x 0.5 = 115,155 which would reduce his gain to 115,155 - this amount would be included in his income.

As he then sold the 155,730 shares for 0.48, assuming he exercised and sold the shares for the same value he would not have a capital gain on these shares (because the ACB of the shares is 0.48 - the same price he sold them for). Basically this is done to make sure that those individuals who are given (out of the money options) only pay tax similar to someone who bought a stock and sold it at a higher price (half of the capital gain). He can use this 155,730 x 0.48 = 74,750 amount to pay off the tax on the 115,155 gain and he would still likely have around 20,000 in cash. He also has adjusted the ACB of his shares to 0.48 so he will only pay capital gains on the increase in share price from 0.48 in the future.